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Eurodollar/Treasury Roundup, Bumpy Ride

Rates had a bumpy ride Monday, rallying off early lows into the NY close, support evaporating late.
  • Tsy yield curves rebounding from year+ lows (2s10s taps 61.463 recently vs. 57.076 low) around midday with better fast and real$ buying in 2s-5s after domestic real$ selling 2s and separately buying 5s around late morning.
  • Short end lead rebound early in second half, 30Y Bonds back to steady after Atlanta Fed Bostic headlines from Yahoo Finance interview: BOSTIC: 50-BP HIKE IS NOT MY PREFERRED POLICY ACTION FOR MARCH, Bbg
  • Saturday FT interview Bostic said 50Bp hike in March possible. “Every option is on the table for every meeting. If the data say that things have evolved in a way that a 50-basis-point move is required or be appropriate, then I’m going to lean into that," Financial Times.
  • US equity markets mostly gaining ground, SPX back to Jan 21 levels and north of 200DMA ESH2 topping 4489.0, DOW climbing 285.0 after trading weaker earlier. Contributing to modest risk-appetite, geopol-risk tied to Russia/Ukraine tension little cooler while US officials say diplomatic paths remain.
  • Sector performance: Consumer discretionary (+2.05%) sees carry over support from Fri; Information technologies (+1.33%); Communication (+0.75%). flipside: Consumer staples (-0.45%) Financials (-0.40%) lead underperformers.
  • Option volumes were fairly muted but continued to favor buying downside put insurance or skew plays: 15,000 short Sep 97.87/98.50 put over risk reversals, 7.5.
  • After the bell, 2-Yr yield is up 0bps at 1.1627%, 5-Yr is unchanged at 1.6127%, 10-Yr is up 1.1bps at 1.7802%, and 30-Yr is up 2.7bps at 2.1002%.

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